India is reportedly sparing no effort to welcome Tesla, led by Elon Musk, into the country, with various government departments working diligently to secure all necessary approvals by January 2024.
The Prime Minister's Office convened a meeting on Monday, bringing together top officials to assess the next phase of electric vehicle (EV) manufacturing within the nation, a meeting that prominently featured discussions surrounding Tesla's investment proposition, Economic Times reported quoting insiders familiar with the situation.
While the meeting initially revolved around broader policy matters, it underscored the urgency of expediting approvals for Tesla's proposed investments in India by January 2024.
"Though the agenda of the meeting was centered on general policy matters, fast-tracking approvals by January 2024 to Tesla's proposed investment in the country was spelt out," ET quoted a top official as saying.
Senior executives from Tesla have held detailed discussions with the Indian government regarding their intentions to establish both car and battery manufacturing facilities within India. Tesla has expressed keen interest in bringing its comprehensive supply chain ecosystem to the Indian market.
Tesla's previous request for a 40% import duty on fully assembled electric cars, as opposed to the current 60% rate applicable to vehicles priced below $40,000, and a 100% rate for those priced above that, remains a contentious issue. India's customs duty framework does not differentiate between electric vehicles and traditional hydrocarbon-powered cars, resulting in higher duties designed to promote local manufacturing. Tesla is advocating for its electric vehicles to be categorized separately and subject to lower tax rates.
An official involved in the discussions suggested that a potential new import policy category could be introduced to provide tax incentives for clean energy-driven vehicles. This incentive, however, would extend to any manufacturer committed to establishing electric vehicle manufacturing units in the country, and not exclusively for Tesla.
Tesla's earlier plans for India had been put on hold, primarily due to challenges in negotiations over import duty reductions. The Indian government had firmly insisted on a commitment to local manufacturing as a prerequisite for any import duty concessions.